Can Roche Win From The War On Lung Cancer? UBS Thinks So

In a report published Monday, UBS analysts upgraded the rating on

from Neutral to Buy. The price target was raised from CHF265 to CHF325. The release of the ASCO abstract has increased the analysts' confidence in the company's lung cancer strategy. "Prior to last week's ASCO abstract release, it wasn't obvious whether Roche would be able to capture significant share with PD-L1 antibody MPDL3280A in lung cancer. The clinical relevance of its biomarker strategy was unclear," the analysts said, adding that there also was no data available to "indicate whether that strategy was viable." The ongoing Phase 3 studies suggest that Roche's lung cancer candidate, MPDL3280A, has the potential to gain a dominant position in the market, while the differentiated biomarket strategy could help it secure approvals in the US and Europe by 2016. The analysts believe that MPDL3280A could prove to be a critical growth driver for Roche during 2015-2020. UBS has accordingly raised its EPS CAGR estimate for 2015-2018 from 5percent to 9 percent. In addition, the company could take the lead in first line treatment of lung cancer with MPDL3280A, especially given that its competitors are at least two years behind in terms of the development process.